Friday, 4 March 2011

Could Asean Drift Apart?

Last year the Association of Southeast Asian Nations celebrated its 43rd anniversary with fanfare, but cracks were visible in the organization.

Thanks to the lopsided development of the Greater Mekong Sub-region, propelled by China with the help of the Asian Development Bank, the area along China's border has been transformed into a region of its own—a trend that could permanently divide Asean.

The Greater Mekong Subregion, or GMS, nominally comprises Cambodia, Laos, Burma and Vietnam as well as Thailand and two Chinese provinces, Yunnan and Guangxi.

However, in reality, China in toto is a member with national-level technocrats engaging in GMS initiatives, and through this massive membership imbalance, the country of 1.3 billion overwhelms the polities and economies of mainland Southeast Asia.

About US$11 billion has been injected into infrastructure investment in the GMS region over the last decade with one-third coming from the Asian Development Bank (ADB). This aid has been channeled into three so-called economic corridors—multi-country transport arteries now being built across mainland Southeast Asia.

The North-South Economic Corridor connects Kunming to Bangkok, while the East-West Corridor ties the Indian Ocean coast of Burma with the South China Sea ports of Vietnam. The Southern Economic Corridor connects Bangkok with Phnom Penh, Ho Chi Minh City and Vung Tau. China openly declares that GMS is the most effective economic mechanism in the region.

The Mekong River—after which the grouping is named—is itself a bone of contention. China already has four dams on the upper part of the river, currently invests in three hydropower dam projects in Laos and another in Cambodia, and plans 12 more on the lower part.

Under a new initiative launched by Chinese President Hu Jintao in July 2009 Yunnan province has been designated as the bridgehead to the mainland of Southeast Asia, through transportation routes, mines, energy infrastructure and foreign trade production bases in mainland Southeast Asia.

The China- Asean Free Trade Agreement, or CAFTA, initiated on 1 January 2010, has greatly increased Chinese trade and investment in the mainland Southeast Asia states. In these increasing interactions, among China's aims is the promotion of renminbi settlement in trade exchanges with GMS partners.

In the first half of 2010, the Agricultural Bank of China started a renminbi-settlement program for cross-border trade with Yunnan, part of China's push to internationalize its currency. Up to 50 percent of cross-border trade is now settled in renminbi.

The funding for economic development of mainland Southeast Asia derives from both ADB coffers and Chinese loans and investment, often difficult to distinguish. China is establishing a US$10 billion China-Asean Fund on Investment Cooperation to support regional infrastructural development. Integration measures include communications and transport infrastructure.

An integrated railway system will connect all GMS countries by 2020, with China as key in providing skills and funding. China-funded high-speed railways and roads will connect Kunming with Yangon, Bangkok, Vientiane and Phnom Penh, while a network of hydro-dams, power-transmission grids and energy pipelines also tie the mainland states to China.

The Kyaukphyu-Kunming oil and gas pipeline, connecting the Burmese coast with Yunnan, when completed in 2013, will reduce China's reliance on the Straits of Malacca for its vital energy supply.

Investment funds have also flowed into these countries from China in much greater volumes.

More than US$8 billion of Chinese funds has been invested in Burma since March 2010 in hydropower, oil and gas, and mining.

By July 2010, Cambodia had 360 Chinese investment projects, the value of agreements totaling US$80 billion.

In November, Wu Bangguo, chairman of China's National People's Congress, visited Cambodia and signed 16 more deals totaling US$6.4 billion.

The degree to which Chinese interests are gaining control over most of the upstream industrial sectors in Vietnam is evident from the official estimate that about 90 percent of engineering, procurement and construction contracts are won by Chinese firms.

Numbers of Chinese people moving into these countries are burgeoning.

Laos, a country of 7 million, estimates 400,000 illegal immigrants from China are in the country.

In the cultural sphere, the countries report increased education in the Chinese language, with Cambodia now claiming the best Chinese language curricula in Southeast Asia and schools staffed with hundreds of teachers from China.

This flurry of developments along its border and the growing Chinese engagement with the countries of mainland Southeast Asia—in effect dividing Asean—have not gone unnoticed by regional powers.

Japan has met with the Mekong nations of Cambodia, Laos, Burma, Thailand and Vietnam, without including China, assuring them of assistance.

Japan's official development assistance committed to the Mekong region over the coming three years is US$ 5.9 billion and more private investment in the GMS is encouraged.

Korea has also declared intentions to participate in GMS development, particularly in terms of transforming transport corridors into full-fledged economic corridors and addressing environmental issues.

In a July 2010 speech in Hanoi, US Secretary of State Hillary Clinton spoke of US interests in the South China Sea and noted that the US saw its relationship with Vietnam "not only as important on its own merits, but as part of a strategy aimed at enhancing American engagement in the Asia-Pacific and in particular Southeast Asia."

Recent US inclusion in the East Asian Summit partially aims at countering perceived Chinese hegemony in mainland Southeast Asia.

The idea of "Asean centrality" in regional architecture, being widely promoted by western interests, is premised on two conditions: that Asean will develop sufficient weight to constitute a bloc, and that members will adopt a common stand on key issues.

Neither condition is likely to be realized, much less maintained, in the near future.

Asean states show an unwillingness to surrender any sovereignty to a central administration and the inability of the body to take unified positions on international issues.

In turn, new physical infrastructure connections, economic interactions, and intimate political and military engagements with China increasingly divide mainland Southeast Asian states from the maritime Asean countries.

Burma, Cambodia and Laos are already virtual client states of China, while Vietnam and Thailand are economically beholden to the economic behemoth.

Asean's most recent response to threat of division is a call for more "connectivity" among its members.

A master plan—announced at the 17th Asean Summit in Hanoi in October 2010, for physical, institutional and people-to-people connectivity—openly recognized emerging division: "This is not likely to be smooth sailing, especially since the two programs [Asean and GMS] have been pursuing parallel efforts and have sunk substantial investments in certain areas of cooperation."

With growing distance between the mainland and maritime states, the likelihood of an Asean Community coming into being by 2015 is increasingly slim. Together with China, the mainland states are now forming a Greater Mekong Region, and the links being developed will override those existing and planned among Asean states. Asean is indeed dividing.

These changes may simply reflect the mainland states' geographic proximity to China or could be a manifestation of a long Chinese tradition to either divide neighboring polities or incorporate them within the Chinese polity.

In either case, revival of a hierarchy is underway in mainland Asia, a phenomenon that some perceive as an indication of the Westphalian system's irrelevance to Asia.

Geoff Wade is a historian with interests in Sino-Southeast Asian relations over time and comparative historiography.